Wednesday, November 11, 2015

Banks could use bitcoin technology by 2016: Study - CNBC

Utilizing blockchain technology would lead to more efficient and transparent systems to track and record financial transactions, or could improve upon existing systems used by banks, according to the report.

"Within capital markets, a number of top use cases are coming to the fore, opening new opportunities for efficiency and generating revenue from greenfield projects, including private equity, interbank payments and corporate debt, among others," said Shagun Bali, a TABB research analyst and one of the report's writers, in a press release.

Read MoreBank of England: Bitcoin could transform stock markets

The report from TABB reinforces findings made by the Bank of England. Last year, the U.K.'s central bank released a report on bitcoin and described the blockchain as a "genuine technological innovation", because it could allow transaction systems to work without a third party intermediary and showed that digital records can be held securely.

However, Bali outlined a number of challenges that will oppose blockchain technology adoption, such as the expense of integrating it into pre-existing systems.

"Further due diligence for defining industry standards with regards to settlement, counterparty and other transactional risks involved are critical," explained Bali. "As blockchain gains greater mainstream adoption, a strong regulatory framework will be necessary to maintain a balance between security and future mass-market blockchain scalability, a critical industry challenge that lies ahead."